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Why Do Blockchain Projects Need a Security Audit?

security audit

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A Blockchain Security Audit is an in-depth evaluation of a blockchain network’s internal operations, aimed at identifying vulnerabilities that hackers could exploit. It involves scrutinizing every aspect of the network, from smart contracts to the robustness of the network infrastructure.

During a security audit, cybersecurity experts conduct a thorough analysis of the blockchain’s code. The primary aim is to discover and rectify any weaknesses in the system. However, while it helps safeguard user funds, it still doesn’t guarantee 100% safety. 

A skilled auditor can help projects get as close to being secure as possible. However, the value of a blockchain security audit extends far beyond simply identifying and fixing problems. 

By addressing potential threats, organizations can build trust with their users and establish themselves as leaders in the industry. Trust is more important than ever in an increasingly interconnected world, and a well-conducted security audit is key to earning it.

What Makes a Blockchain Security Audit Essential?

While blockchains can be highly transparent and tamper-proof, they are not fully immune to security risks. For projects, an unknown security vulnerability can lead to an exploit and consequently, huge losses of assets. This is where security audits become essential. 

  • Preventing Exploits and Attacks: The primary reason for conducting security audits in blockchain projects is to identify and fix vulnerabilities before they can be exploited by attackers. These audits act as a proactive safeguard against potential hacks or fraudulent activities.
  • Ensuring Code Integrity: Blockchain projects are often open-source, meaning the code is visible to everyone. While this promotes transparency, it also means that any flaw in the code is openly accessible to hackers. 
  • Building Trust with Users: Trust is a crucial element in the adoption and success of blockchain projects. Users need to be confident that their transactions and data are secure. By regularly conducting security audits and addressing identified issues, blockchain projects demonstrate their commitment to user safety, thereby building trust.
  • Compliance with Regulations: As blockchain technology becomes more mainstream, regulatory bodies are increasingly setting standards for security and data protection. Conducting security audits ensures that blockchain projects comply with these evolving regulations.
  • Long-Term Stability and Reliability: Regular security audits help in maintaining the long-term stability and reliability of a blockchain project. They ensure that as the project evolves and grows, its security measures are updated and reinforced accordingly.

Where to Get a Blockchain Security Audit

Trends in cybersecurity are now shifting towards onboarding third-party auditing firms for thorough scrutiny of the codebase before launch instead of “testing in production”. With that, many Web 3.0 cybersecurity companies have expanded their services to include additional services like on-chain monitoring products and bug bounty programs. 

For example, Hacken.io offers auditing in addition to post-deployment security monitoring products like Hacken Extractor. It also runs one of the biggest bug bounty programs on Web3 called HackenProof with 20k+ curated engineers. Such additional services offer extra support and assistance to projects based on their security needs.

How to Pick a Blockchain Auditing Company

When picking a Web 3.0 auditing company, start by looking at their previous audits. The reputation and scale of their audited projects reflect the auditor’s reliability. That is simply because high-profile projects attract hackers more frequently.

While many auditors can audit Ethereum smart contracts, not all are skilled with other blockchains like Solana, Polygon, Avalanche, Fantom, and BNB. The complexity arises due to the distinct architectures of EVM-compatible chains. Unlike Hacken.io,  which specializes in three programming languages, Rust, Solidity, and Move, other companies may have limited expertise.

Different auditors might do more or less detailed audits, depending on what they agree with their clients. More detailed audits are better, but they take longer and cost more. 

With that, the quality of reports is also important. A thorough audit report should detail all identified issues during the investigation and verify if these issues were subsequently resolved by the project. It should also provide actionable steps to mitigate the risks. Despite the technical nature of smart contract security audit reports, their effectiveness is enhanced when presented in a well-structured and understandable format.

Top Blockchain Security Auditing Companies

Hacken

Hacken is a leading cybersecurity auditing company specializing in Web 3.0 security audits. Since being established, the company has completed over 1500 audits with zero exploits reported in 2022. With a portfolio of over $100B, Hacken has partnered with over 180+ ecosystems and employs 60+ industry-leading engineers. 

Their post-deployment security solution called Hacken Extractor offers on-chain monitoring with custom triggers. It detects potential attacks 24/7 to mitigate risks and helps improve the response time to prevent the loss of assets in real-time. 

Beyond that, the company offers a range of auditing services that include: 

  • Smart Contract Audit: It is designed to detect weaknesses in the smart contract with a thorough analysis of the code base and lead auditor’s review. The programming languages that Hacken’s engineers specialize in are Rust, Solidity, and Move. 
  • Blockchain Protocol Audit: Critical vulnerabilities in the blockchain’s architecture can cause massive losses and put projects at risk. This audit involves a range of security testing to secure the entire blockchain architecture.
  • Proof of Reserves: It helps increase the transparency of exchanges and appeals to regulators. The company has been strengthening and implementing its Proof of Reserve methodology in cooperation with CER.live since 2019.
  • dApp Audit: Hacken’s dApp audits focus on protecting assets on decentralized apps along with sensitive data. Projects that benefit from this audit include cryptocurrency wallets, cross-chain bridges, and all apps that carry sensitive info, require authentication signing, and more. 
  • Penetration Testing: Hacken helps simulate real-world scenarios involving cyberattacks. However, this is done in a controlled environment to pinpoint the weaknesses or vulnerabilities in the project. After detection, Hacken’s security team delivers actionable reports.
  • CCSS and Tokenomics Audit: This ensures that projects are using the best security practices and robust token models designed to increase trust in the community. 

The company also runs a Web3 bug bounty program called HackenProof, in which 20,000+ curated ethical hackers compete to find unknown vulnerabilities in projects. As part of this program, Hacken has found 10,000+ bugs. Projects that use HackenProof include CoinGecko, Gate.io Avalanche, Huobi, and more. 

Trail of Bits

Trail of Bits is a cybersecurity company that has been around since 2012. It not only offers cryptography and blockchain security audits but also extends its services to other domains of software solutions. The company has created products like iVerify, which help keep mobile devices secure from threats. 

This company offers a blockchain-secure code review service to detect vulnerabilities in blockchain protocols and smart contracts. Trail of Bits has worked with leading protocols like Algorand, Acala, Aave, Arbitrum, Balancer, and more. 

Their service resolves a wide range of security concerns across blockchain applications, including:

  • Smart Contracts: They specialize in reviewing smart contracts across various platforms, such as Ethereum, Algorand, Cairo/Starknet, Cosmos, Solana, and Substrate/Polkadot.
  • Blockchain Nodes: This includes L1/L2, consensus mechanisms, virtual machines, and network components.
  • Bridges, Decentralized Finance, and Gaming Applications: They further extend their security expertise to blockchain bridges, cryptocurrencies, and blockchain games.

The company has developed a threat model that helps companies assess the potential risks and threats. This threat model does the following: 

  • Identifies and tests vulnerabilities in the blockchain apps 
  • Performs analysis of the effects of the vulnerabilities
  • Finds out the probability of an attack and calculates the risk score
  • Provides actionable steps for remediation

Quantstamp 

Quanstamp is a company that is known for its thorough, smart contract audits. It employs a team of highly skilled security researchers and engineers who have worked at tech giants like the Ethereum Foundation, Facebook, and Google. 

Their service extends to multiple languages, and they audit various systems like Ethereum 2.0, BNB Chain, Solana, OpenSea, Curve, Cardano Maker, and more. Due to this reason, it has secured more than $200B in value. 

Quantstamp has worked with the following leading Web 3.0 giants. 

  • Blockchains: Quanstamp has experience auditing projects in Ethereum 2.0, Flow, Avalanche, Solana, Cardano, Near, Binance Smart Chain, Tezos, and Hedera Hashgraph. 
  • Decentralized Finance: In DeFi, this company has worked with projects like Make, Polygon, Lido, Curve, Arbitrum, Compound, SushiSwap, Chainlink, Rook, BadgerDAO, and xDAI. 
  • NFTs: In the NFT market, Quantstamp has worked with OpenSea, Illuvium, NBA Top Shot, Axie Infinity, Beeple B.20, Decentraland, Arcadeum, Zora, and SuperRare. 
  • Enterprise Solutions: Quantstamp has offered its auditing services to enterprises like VISA, GMO Internet Group, Government of Dubai, Toyota, Siemens, and World Economic Forum. 

Slowmist 

Slowmist is a cybersecurity firm that focuses on Blockchain ecosystem security. It has worked with some leading cryptocurrency exchanges like OKX, Binance, Houbi, Crypto.com and Pancakeswap.

Outside of security audits, it offers a range of products like MistTrack (crypto tracker), an AML (anti-money laundering) tool, SlowMist Hacked (an archive of crypto hacks), and Vulpush (a vulnerability monitoring tool). 

The main audit services offered by Slowmist include: 

  • Exchange security
  • Wallet security audit
  • Blockchain security audit 
  • Smart contract audit 
  • Consortium blockchain security solution
  • Red teaming 
  • Security monitoring 
  • Blockchain threat intelligence
  • Defense solutions development
  • MistTrack service

CertiK

Founded by Columbia and Yale professors in 2018, CertiK is a blockchain security company that uses AI and formal verification to offer end-to-end security audits of smart contracts. The company has also set up a CertiK chain, which is a blockchain-centered around security. 

According to the company, it has evaluated more than 1800 projects and assessed over $278B in market cap valuation. CertiK’s main services include: 

  • Smart Contract Audits
  • Blockchain L1/L2 Audits 
  • Wallet Audit

In addition to the above services, it also offers various products including: 

  • Skynet: A security analysis tool developed by CertiK’s cybersecurity researchers to visualize off-chain and on-chain data. 
  • KYC: CertiK’s provides identity verification for teams using a robust vetting process without compromising standards of data protection. 
  • Bug Bounty: It runs a bug bounty program with a highly technical community, offers 0% fee for bounty payouts, and offers full end-to-end support on bounties. 
  • PenTesting: CertiK offers dynamic penetration testing at both the application level and network level to assess vulnerabilities. This also includes web and mobile app coverage. 
  • SkyInsights: This product offers extensive real-time monitoring of transactions and alerts in case of any suspicious activity. 
  • Formal Verification: It is a mathematically proven method that makes the auditing process of blockchains and smart contracts very effective. 

Conclusion

Blockchain security auditing is a critical job that should be taken seriously. It helps companies find potential vulnerabilities and assess whether they meet the growing security demands of the industry. Not to mention, having audits done by trusted firms significantly raises the trust of the community and potential investors.

Based on our analysis of the leading blockchain security audit firms, Hacken.io deserves recognition for offering a wide range of audits and Web 3.0 security solutions. This audit firm runs one of the biggest Web 3.0 bug bounty programs called HackenProof, in which blockchain companies participate for additional protection. 

FAQs

What are the key factors to consider when choosing a blockchain security auditing company?

Main factors include the company's reputation, the scale of projects they've audited, their expertise in various blockchains and programming languages, and the quality of their reports.

How do additional services like penetration testing and bug bounty programs enhance blockchain security?

These services simulate real-world attack scenarios and crowdsource vulnerability detection. This provides deeper insights into potential security flaws and required measures.

Why is it important for an auditing company to have experience with different blockchains and programming languages?

Different blockchains have unique architectures and vulnerabilities. Expertise in various programming languages and platforms results in a comprehensive and effective security audit.

Can blockchain security audits guarantee 100% safety of a project?

No, while audits significantly enhance security by identifying and resolving vulnerabilities, they cannot guarantee absolute safety due to the evolving nature of cyber threats.

What role does a blockchain security audit play in the trust and confidence of cryptocurrency investors and the community?

Audits reflect a project's commitment to security, which helps build trust and confidence among investors and the cryptocurrency community.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Shummas Humayun

Shummas is an aspiring Web 3.0 developer and a technical research writer interested in renewable energy, blockchain, and cybersecurity. He also enjoys coffee and gaming in his free time.

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